Glossary

B

BRAZILIAN ACCOUNTING PRONOUNCEMENTS COMMITTEE (CPC):

Its objective is to study, prepare, and issue technical documents on accounting procedures and the disclosure of information of this nature, to allow the issue of norms by the Brazilian regulatory entity, aiming at the centralization and standardization of its production process, always taking into account the convergence of Brazilian accounting to international standards.

B2B (BUSINESS TO BUSINESS):

“Business to business” model where the end customer is another business or organization.

B2C (BUSINESS TO CONSUMER):

“Business to consumer” model where the final customer is an individual.

B3:

B3 S.A. – Brasil, Bolsa, Balcão; the Brazilian Stock Exchange (formerly BM&FBovespa).

BR GAAP:

Refers to the set of accounting standards in force in Brazil.

C

COMMON SHARE (ON):

The common share is a portion of the company’s share capital. Common shares are used in both privately held and publicly held companies. The great advantage of common shares is that they give voting rights to their holders. Thus, they can participate in the decisions of the company and in the choice of who manages it.

CAPITAL INCREASE:

Many companies use the capital increase to continue attracting investments for new projects. Please read the article and understand the process.

CAC:

Customer Acquisition Cost.

CAGR:

Compound Annual Growth Rate.

CMN:

National Monetary Council.

COSS:

Cost of Services Sold.

CVM:

The Brazilian Securities and Exchange Commission.

CASH AND CASH EQUIVALENTS:

Cash is the amount of cash and bank deposits available to a company. Cash Equivalents are all short-term, highly liquid investments that are subject to an insignificant risk of change in value.

CHURN:

Churn is an indicator that calculates how many users stopped subscribing to a company’s service or product over the previous period.

COHORT:

Cohort is a concept intended to classify a group of users with similar behaviors.

CROSS SELLING:

Cross Selling is the strategy of offering the customer a product or service that is complementary to what he or she has already purchased or is about to purchase.

COST OF SERVICES SOLD (CSS):

Represents the costs incurred on the sale of a product or service provided by a company.

D

DEPRECIATION:

Depreciation indicates how much of an asset’s value has been used. It is used in accounting to try to match the cost of an asset to the income the asset helps the company earn.

DOWNGRADE:

Request by the end user of the service to switch from the current plan to another with a lower cost than that initially contracted.

DIVIDEND:

Dividend is the long-awaited profit of a company divided among shareholders.

E

EBITDA/ADJUSTED EBITDA:

Financial indicator that informs the profit of a company before discounting what said company spent on interest and taxes, as well as what it lost in depreciation and amortization. When it is disclosed as “adjusted”, it means that the calculation was made in a customized way by a company, using its own rules.

EBITDA MARGIN:

Difference between the EBITDA value by the revenue value, representing the portion of revenue that generated cash for the Company.

EARNINGS PER SHARE (EPS):

is a fundamental indicator that is very useful to have a true notion on the profitability of the company’s shares. It serves to get an idea of what the net profit of each share issued by a company is, and is ideal for checking whether the stock generates profit or loss.

EX-DIVIDEND DATE:

When acquiring a share aiming at getting returns with dividends, it is essential to be aware of the Ex-Dividend Date. Basically, it is the date until which the people who acquire the share will receive dividends; investors who acquire the share outside the Ex-Dividend Date will not receive dividends until the next bonus date.

EXTRAORDINARY SHAREHOLDERS’ MEETING (ESM):

The ESM is a type of meeting that can be called at any time by a company and aims to discuss any matter of interest to the company, except those that are mandatorily addressed at the Annual Shareholders’ Meeting (ASM).

F

FREE FLOAT (FF):

The Free Float measures the percentage of the company’s shares that can be publicly traded on the market and is considered by investors when analyzing a company for the purchase of its shares.

FINANCE INCOME (COSTS):

Difference between total finance income (income not related to the company’s activities, such as interest and discounts) and finance costs (expenses not related to the company’s activities, such as loans, tax on financial operations and bank fees).

G

GROSS PROFIT:

Gross operating profit or sales profit is the difference between a company’s revenue and its variable costs (raw materials, production costs, commissions and other productive inputs).

GROSS MARGIN:

Result of dividing Gross Profit by Net Revenue. It presents the company’s profitability, according to a percentage of profit that the company earns on its sales.

GROSS REVENUE:

Represents the amount of revenue arising from a transaction between an entity and a buyer that must be measured at fair value. It can arise from both the sale of goods and the provision of services.

H

HEADCOUNT:

The number of employees in a company.

I

INCOME TAX (IR):

Federal income tax.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS):

International Financial Reporting Standards. It is the set of international accounting standards issued and reviewed by the International Accounting Standards Board (IASB).

IPO (INITIAL PUBLIC OFFER):

The Initial Public Offer refers to the process in which a company starts selling its assets to the public for the first time.

L

LAST TWELVE MONTHS (LTM):

Values accumulated in the last twelve months.

LIABILITIES:

It is the balance of everything that is owed by an individual or a company.

N

NET DEBT:

Net debt is the indicator that shows the degree of indebtedness of companies in relation to their shareholders’ equity.

NET INCOME PER SHARE:

A very useful fundamental indicator to have a real notion about the profitability of a company's shares. It is used to get an idea of what the net income of each share issued by a company is, and is ideal to prove whether the paper generates profit or loss.

NET MARGIN:

Result of dividing Net Profit by Net Revenue, which indicates the percentage of profit in relation to total revenues for the period.

NET REVENUE:

Represents the result of sales and services rendered after deducting costs, discounts, rebates, returns and taxes levied on sales/services.

NET PROFIT:

Actual earning of a company, calculated by the difference between total revenue, total costs and expenses, finance income and costs, and taxes.

NOVO MERCADO:

A special segment of B3’s securities listing, intended for trading securities issued by companies that voluntarily commit to adopting corporate governance practices and the public disclosure of additional information in relation to what is required by law, provided for in the Novo Mercado (New Market) Regulations.

O

OPERATING PROFIT:

Operating profit is an expense-free profit; that is, a profit generated solely by the business operation. This indicator can be found in a company’s statement of income, which presents the accounting results of a business.

OPERATING EXPENSES:

Selling, General and Administrative Expenses, or SG&A. Include all costs that are not directly related to production (employee salaries and marketing expenses, for example).

P

PAYOUT:

Payout indicates when net profit was allocated to shareholders in the form of dividends. In other words, it is the ratio between the profit distribution and total profit.

PRICE/BOOK VALUE (P/BV):

This multiple is the ratio of the stock price divided by its equity value. The P/BV indicator shows how much investors are willing to pay for the company’s equity.

PRIVATE EQUITY:

Private equity funds, also known as managers, are responsible for allocating investors' resources in companies or startups, becoming partners in them. The objective of this long-term investment is to boost the company's results and thus increase its business value.

PROFORM:

Financial information that publicly traded companies perform on a voluntary basis, provided that they are duly qualified and for a justified purpose, such as in cases of corporate restructurings, acquisitions, sales, mergers or business spin-offs.

R

ROA (RETURN ON ASSETS):

An indicator that shows how profitable the company is in relation to the total assets it owns.

ROE (RETURN ON EQUITY):

A company’s equity is simply the own capital it produces. In other words, this indicator can measure how much value a company generates from its own funds and the funds of its shareholders.

S

SAAS (SOFTWARE AS A SERVICE):

SaaS, or Software as a Service, is a way of making software and technology solutions available over the Internet as a service.

STATEMENT OF FINANCIAL POSITION:

It is a financial statement that presents a “picture” of the company’s financial position.

STOCK PRICE:

The stock price can be understood as the latest price, or final value, for a given security. On the stock market, it is used as a synonym of the price of an asset itself. In said situation, it is defined by the entire market, and not just by an individual.

SHARE:

Shares (of stock) represent the equity interest that the investor holds in a company, and represent a right over the assets and profits of such company.

SHAREHOLDERS’ EQUITY:

Shareholders’ equity represents the residual value of a company’s assets after deducting all its liabilities.

SG&A (SELLING, GENERAL AND ADMINISTRATIVE EXPENSES):

SG&A expenses include all costs that are not directly related to production, such as employee salaries and marketing expenses.

SOCIAL CONTRIBUTION (CSLL):

Complement of Income Tax taxation.

SELIC:

The economy's basic interest rate, the main instrument of monetary policy used by the Central Bank to control inflation.

T

TARGET PRICE:

An analyst’s forecast for the stock price on a certain date, generally further in the future, such as the end of the current year, but not always. It can be calculated using the discounted cash flow methodology and consider projections from other analysts. The purpose of this practice is to see the appreciation or depreciation potential of a given stock.

U

UPGRADE:

Request by the end user of the service to switch from one plan to another that is superior to the one initially contracted.

UPSELL:

Strategy that aims to sell a product with higher added value compared to that originally held by the consumer